A feasibility study for the viability of a new multi-screen cinema in Dumfries town centre is being carried out, in in hope to create a new £10 Million, state of the art 450 seat Multi Screen facility.
A report going to the council states –
Dumfries and Galloway Council, together with the community and Third Sector organisations have committed to the vision of a Dynamic Different Dumfries where a wealth of history meets a bright sustainable future. A welcoming place with a vibrant, and connected lowcarbon town centre, which celebrates its rich heritage, arts, culture, and diversity.
To achieve a positive community-led vision and assisting the Council and Dumfries
Partnership Action Group (DPAG) in their delivery of an overall strategy and action plan for the town (Dynamically Different Dumfries), Entertainment Solution Services Ltd (ESS), in collaboration with AD Studio and RLF, has been commissioned to carry out a feasibility study for the viability of a new multi-screen cinema in Dumfries town centre, in order toregenerate the area and increase footfall.
Currently, there is no purpose-built full-time multi-screen cinema within a 25-minute drive time ring of Dumfries & Galloway.
The function of the study is to inform and advise Dumfries & Galloway Council on the commercial feasibility of a cinema, and the best option for the development of such and advise on next stage activities to achieve appropriate capital investment for the commercial development of the project, if deemed commercially viable and in the interest of Dumfries and Galloway Council and its people at large.
Methodology ESS and its associated partners applied following methods in order to reach a non-biased, comprehensive and inclusive conclusion:
• Location visits
• Existing local knowledge of the area and its surroundings
• Official and Industry approved Data (e.g., British Film Institute, U.K. Cinema
Association, Office for National Statistics)
• Existing industry knowledge and experience
• Digital public domains
• Social Values and Community Focus
EXECUTIVE SUMMARY
Cinema Feasibility Report Dumfries & Galloway / Sept 22
Industry Background
After year-on-year box office increase, globally and on a national level, cinemas found themselves in unchartered waters when the pandemic hit. Worldwide, the majority of cinemas were closed for months and once open again, had to operate on reduced seating capacities.
Pandemic-induced production delays, apprehensive Hollywood studios continuing to postpone blockbuster release dates, cinema hesitancy particularly by the 50’s plus, and a general lack of mid-budget and arthouse films have already impacted the cinema industry negatively. Most notably with Cineworld Cinemas filing for Chapter 11 bankruptcy protection in the USA, and Vue Cinemas restructuring their finances, that will result in bond holders becoming the shareholder owners of the company and existing shareholders, including management, being wiped out.
Overall, the global box office fell by 72% in 2020, finishing the year with only $12 billion in ticket sales, compared to a record year in 2019, which grossed $42.5 billion globally.
The UK box office in 2020 accounted for 44 million admissions with a total box office of £307 million, a dramatic decrease of 76% compared to 2019’s box office revenue of £1.25 billion, making 2020 the lowest UK box office revenue since multiplex cinemas were first developed in the mid-80’s.
2021 saw a box office increase compared to 2020 with a UK box office of £602 million, which overall was 52% down compared to pre-pandemic 2019.
Admissions for the first 6-months of 2022 are down by an approximate 27% compared to the same period of pre-pandemic 2019.
The trend clearly shows cinemas are currently almost entirely tentpole driven, with the little available mid budget and arthouse content, mostly underperforming.
Younger audiences still want to see highly anticipated, high-budget films with exceptional special effects and globally beloved actors on a big screen (e.g., Top Gun: Maverick), whilst older audiences are still hesitant to return to the cinema, preferring Subscription Video on Demand (SVoD) platforms, which they have become accustomed to using during the pandemic.
Notional Sites Assessment
AD-Studio, in collaboration with ESS carried out a high-level assessment of 12 potential locations within the Dumfries town centre zone, based on an assumed notional cinema of approximately 2,000m2 area requirement.
The purpose of the site analysis exercise and the following Option Scoring Workshop, was about establishing suitable areas within the town centre and to illustrate how a cinema of a proposed notional size and arrangement could fit within the town centre. The purpose of the assessment was not one of selecting a final development site.
Overall, 6 of the 12 notional sites were deemed as fitting for an options scoring exercise to select a preferred suitable site for an initial concept design. Those options were considered and scored against relevant criteria at an Options Scoring Workshop. These site analysis and options scoring exercises are presented and documented in AD-Studio’s ‘Cinema Feasibility Potential Sites Analysis’ report.
An indicative cinema layout design has been produced by AD-Studio to illustrate the size and type of cinema which could be accommodated on the selected sites. The concept layout and accommodation schedule for this notional cinema design is presented in AD-Studio’s ‘Cinema Design Proposal’ report. A high-level capital construction and fit out cost estimate for the indicative cinema has been prepared by MGAC RLF Quantity Surveyors to accompany the feasibility. The notional cinema design and high-level cost estimate give a sense of scale and perspective to form the basis for the next stage development of a detailed project brief. Only a future procurement process to deliver the cinema will determine the actual site within the town centre for the project, and that will be based on a number of factors such as: the actual developed cinema project brief, cinema operator partner, commercial developer partner, other project stakeholders who may have an interest in funding and operating certain other elements within what could be a mixed leisure and community facility and who would possibly influence the brief, site availability, site costs, development costs, the mix of funding sources, etc.
It recognised that over and above the identified core cinema (i.e., what a commercial cinema operator would wish) there could be other complimentary community cultural and leisure elements within the cinema project, which would then determine the actual size of site required to deliver the project, and so procurement routes to secure an appropriate available site and funding can be pursued.
Cinema Size & Projections
Having carried out site visits, analysed cinema industry data (national & regional), including box office revenue from cinemas within a 50-minutes’ drive-time ring, in addition to Dumfries & Galloway’s demographic profile, ESS recommends a 5, maximum 6-screen cinema with a total seating capacity of no more than 450 spacious seats, with screen sizes similar to:
Screen 1 – 95 seats
Screen 2 – 95 seats
Screen 3 – 124 seats
Screen 4 – 74 seats
Screen 5 – 45 seats
Total seats – 433 seats
Despite the overall challenging situation faced by the cinema sector ever since the
pandemic, it is ESS’ opinion that Dumfries is in a very unique position as the town does not have a purpose-built multi-screen cinema within a 20-minute drive-time and lacks all weather leisure destinations for local residents as well as for tourists.
ESS projects that the proposed cinema in Dumfries will operate at 24% occupancy and 168,870 ticket admissions per annum at peak. However, should trade fall to 108,077 ticket sales (15% seat occupancy), which is 64% of the ESS projected admissions in the business appraisal plan, then the cinema will still break-even. With no first run multi-screen cinema within the immediate 20-minute drive-time, more so longer distances to Stranraer and beyond, population reach is above a healthy 86,000 within 40 minutes’ drive. The anticipated construction cost for the proposed cinema development is in the region of £10,368,000 which is reflective of a £4,660/m2. This is split Shell Works £5,359,500 (£2,409m2) and Fitout Works £5,008,000 (£2,251/m2) as summarised in section 3. Costs are based on a GIFA of 2, 225 m2 or 23,950 sqft to deliver a five-screen cinema with 433 seats. Current construction and cost of capital are presently market challenges that will
have to be addressed with a mix of social, economic and community opportunity costs to be considered.
The multi-screen cinema can be a stand-alone building or multi-purpose location. This is to be determined at later stage once a location has been identified.
Industry Forecast
It is ESS’ opinion that a full box office recovery, if at all, may take a decade to deliver, with exceptional peaks (Top Gun: Maverick) and troughs to manage along the way. In addition to a lack of content, cinema hesitancy in favour of SVoD platforms, the current economic climate including geopolitical challenges and fast technical advances are putting enormous pressure on cinemas.
Record high inflation and the rise in living costs will lead to cuts in peoples spending, with non-essentials, such as e.g., leisure activities, having to give way to cover essentials. Technical advances such as the rapidly advancing metaverse will challenge cinemas even further, with Disney and ViacomCBS (owned by National Amusements) already in talks to see how they can get all of their intellectual property into the metaverse, in order for their customers to watch any Disney or ViacomCBS production, TV shows and movie, in the virtual world.
The cinema market is in a long overdue period of transition and change, that will require cinemas to re-invent itself and, re-build and re-capitalise from a base where there are now more active screens than in 1950, but with cinema ticket sales levels from the mid-1990’s.
The numbers of films available is vastly reduced due to production backlog caused by the pandemic. Currently cinemas are predominantly tentpole driven, with mid-budget, niche and arthouse content lacking. Going forward, the trend clearly indicates that there will be far less films a year released into cinemas, with studios focusing on the production of big budget
movies. The aim of these big budget productions is to ultimately deliver higher box office revenue with a smaller selection of “must-see” films. Yet, just to “put on a film” is simply not enough anymore to attract large crowds. Cinemas will
have to become event driven, customer and community focused, inclusive and creative to make it “worthwhile” for people to leave the comfort of their homes.
Recommendations
Cinemas, after all, are businesses, and therefore need to be commercially (or creatively i.e., Glasgow Film Theatre) viable in order to succeed and to be long term sustainable. Whilst there are certain factors such as affordable ticket prices and low-cost parking which are essential for any successful site, ESS sees great potential for Dumfries and Galloway to apply a holistic approach, that will benefit the area and its people at large. Hence, in addition to implementing a sustainable business strategy, social values can and should be
incorporated within the strategy.
Employment and Skills:
• Enabling local people to access and obtain the skills needed for part-time or full-time
employment in the film and cinema markets
• Providing employees with new skills for now and into the future
• Creating employment opportunities within the community
• Removing barriers to employment in the entertainment industry for underrepresented and disadvantaged groups
Local Business & Economy:
• Extend the precinct or neighbourhood opening times beyond traditional retail hours
and offer an alternative all-weather experiential offer throughout the year.
• Various F&B offers within the vicinity of the cinema (families, couples, professionals
etc.)
• Affordable Ticket Prices and fairly priced F&B offers within the cinema
• Low cost validated and safe car parking, easy access to public transport and
walkways/cycle links
• Free WIFI within the town centre
• The cinema should be well designed and operate with a focus on community
engagement and ideally engage the community in the planning process.
• The cinema should be involved in meetings with town centre stakeholders, e.g.
Robert Burns Centre, Chamber of Commerce, Dumfries College and tourist
attractions and help to develop events such as film festivals and charity fundraisers.
• Providing work opportunities and create a symbiosis between cinema and small,
medium, micro-sized businesses, social enterprises and minority owned businesses
Procuring goods and services locally where possible, rather than buying from
multinationals,
• Combined cinema offers such as cinema ticket & dinning, cinema ticket & supervised
childcare, cinema ticket & tourist attraction combo etc.
• Supporting small, medium, micro-sized businesses, social enterprises and minority
owned businesses to improve capability and grow a sustainable community (e.g.,
enable local artists to exhibit their work in the cinemas café & bar area)
• Outdoor screenings with a range of local vendors offering various types of foods and drinks
• Complimentary Leisure Offers
Engagement:
• Customer focus and engagement creates loyal customer base
• Offer talker screenings, film clubs, film quizzes, senior citizens screenings to bring
like-minded people together
• Engage customers in programming (within reason-e.g., film suggestion box)
• Engage with young film makers and offer opportunity to screen their shorts/films etc.
• Educational screenings in collaboration with schools
• Engage Dumfries College and the public at large during the planning process and ask them what THEY want their cinema to be
• Coordinated film programming between cinemas within the area (consider timings for possible “spill over” audience and possibility of a wider range of films being shown within the region)
• Screenings for the elderly (including residents of elderly care home) with possible
transport to and from the cinema?
• Carrying out volunteering activities that deliver benefits to local communities
• Partnering with national charities to support employment opportunities and
environmental regeneration to meet local needs
• Working with local charities and stakeholders on key themes to deliver additional
benefits to the communities in which cinemas operate in
• Working with education and training providers, industry bodies and charities to offer curriculum support and work experience opportunities
• In collaboration with local charities and community groups, support and encourage the community to live healthier and happier lives.
Environment:
• Using resources efficiently to reduce waste (in collaboration with college who offers these very courses)
• Donate left over foods to food banks
• Playing a part to reduce air pollution, noise, vibration, and nuisance within local
communities to improve health and wellness
• Promoting sustainable, local, and ethical procurement (including “Fit out” of the
cinema) Governance, Measurement & Reporting:
• Maintaining clear accountability for delivering this policy
• Monitoring and reporting social value impact by using recognised independent tools(recommended)
• Continuously improving standards, efficiency, and effectiveness
Conclusion
Where there are challenges – there are opportunities. Dumfries is in an almost unique position by being one of the few “under-screened” areas in Scotland, with no purpose-built multi-screen cinema within a 20-minute drive time.
In order to build a loyal audience, and to be “more than just a cinema” ESS recommends a community focused and event driven cinema, either as a stand alone or as part of a multi purpose venue.
The cinema can be self-sustaining operationally and pay rent, service charge and business rates and deliver over £6.7 million of property revenues over a 20-year lease period, while still generating an operating profit.
Dumfries offers a wide range of creative, historic and cultural leisure options, but lacking digitally driven activities such as creative hubs, digital museum/exhibitions, free WIFI within the town centre, expansion of Virtual Reality & eSports (depending on levels of existing
business), and even a film production facility (skills training in conjunction with Crichton Campus). Offering a selection of digital activities would not only attract younger generations to the area, but it would also serve as a preparation for the future and diversify the currently more traditional entertainment & leisure offers available. In addition, a full time cinema will provide an all-weather location within the town centre, and will be an additional venue to support the growth of tourism in the area The cinema should be an integral part in the delivery of the Dynamically Different Dumfries vision.
